Etihad runs ahead of schedule

Carrier on target to beat last year's $14m profits as region attracts growing passenger numbers and the Australian and Asian markets thrive

Abu Dhabi's carrier Etihad Airways CEO James Hogan, speaks to press duringthe World Route Development Strategy Summit in Abu Dhabi, on September 30, 2012. Hogan said Etihad Airways is projecting $5 billion in revenues in 2012, up from $4.1 billion last year. He also said that the carrier was looking to keep "sustainable profitability in place" after posting $14 million in net profits last year, in its first-ever registered profit since it began operations in 2003. AFP PHOTO/KARIM SAHIB *** Local Caption *** 573809-01-08.jpgShow less

James Hogan, the chief executive and president of Etihad Airways, is a man in a hurry.

With another set of record results posted yesterday, and so long as nothing untoward happens, he is on target to beat last year's US$14 million (Dh51.4m) annual profit by the end of this year.

"We're pushing hard," he said. "But it will all be about the fourth quarter. If it is a good one, we'll be on target to deliver robust figures. But I've been in this business long enough not to speculate."

Certainly the economic winds are blowing fair. Last week the International Air Transport Association (Iata) announced an upward revision to its global aviation outlook for this year. The fall in airline profits from the $8.4 billion that the industry earned last year will be cushioned by improved performance, with airlines now expected to earn $4.1bn this year, up $1.1bn from the $3bn forecast in June.

And Etihad's performance will be one of the drivers behind Iata's prediction that Middle East carriers will outperform the rest of the world by the end of the year with the strongest passenger traffic growth, up 17.1 per cent, as the region's carriers continue to expand their long-haul market share with connections through their expanding hubs.

"To illustrate the region's growth, the share of international passenger traffic held by its carriers has expanded from 4.8 per cent in 2002 to 11.5 per cent in August 2012," said Iata. That growth however, is not down to "trends" as far as Etihad is concerned, said Mr Hogan. "It is the pillars we've put in place that are driving our growth organically," he said.

"We now have 39 code-sharing partners giving us a total network of 315 destinations, more than any other Middle Eastern carrier.

"The wide segmentation of our business is helping to ensure our continued profitable growth. Australia and our major Asian markets are performing strongly. Our routes into China - Beijing, Shanghai and Chengdu - are showing particular potential, which will be further boosted by the strong growth of connecting markets into Africa and our code-shares.

"Revenue from code-share partners represented 18 per cent of Etihad Airways' total passenger revenue in the quarter."

During the quarter, the Abu Dhabi carrier signed interline and code-share agreements with Aer Lingus, China Eastern Airlines and RAK Airways, but its main partner airlines are behind the growth drive.

Etihad owns almost 30 per cent of Air Berlin, 10 per cent of Virgin Australia and 40 per cent of Air Seychelles.

"Air Berlin is going through a transformation," said Mr Hogan. "But next year we're all confident they will achieve the profits we are predicting and seeking. They've already put 50,000 passengers into our system this year so far and we've put 100,000 into theirs. It has given us huge access into a key market in Europe.

"At Air Seychelles, we downsized the company. Over 300 people left and we have implemented a new working the structure. You can't fly and make a profit if you are going around duplicating function. You've got to look at your overheads and strip out costs … training, head office and back-office functions, revenue planning and route planning … we've got to look for areas where we can work together, cut out costs and look to create centres of excellence that each operation can share in.

"With Air Berlin, we have established a foundation for further cost synergies through mutual maintenance programmes, the integrated 787 Dreamliner programme and international sales representation."

In its own backyard Etihad costs per available seat kilometre (Cask), excluding fuel, have fallen to their lowest levels this year, according to an independent benchmarking study by the aviation consultant Seabury. It shows that Etihad is in the lowest cost quartile for Cask, when compared to other major international full service airlines.

Emiratis in the lead at carrier: 1,00oth national joined the airline's staff this quarter

UAE nationals have become the largest nationality group working for Etihad Airways, as the airline works towards a 30 per cent local workforce.

With the 1,000th Emirati member of staff joining the company during this quarter, Emiratis now make up 21 per cent of the airline's core employee workforce.

Four years ago, Emiratis were only the ninth-largest nationality group at Etihad.

"We are working towards a benchmark of 30 per cent," said James Hogan, the chief executive and president of Etihad.

"The Emiratisation scheme, launched in 2007, offers a wide range of career opportunities for UAE nationals, including programmes for cadet pilots, technical engineers, graduate managers, guest service agents and call centre agents.

"We run a meritocracy, and that requires we bring on our own people. The Abu Dhabi Government has identified tourism as one of seven sectors which will lead job creation for Emiratis during this decade.

"At Etihad, we are proud to be playing our part in delivering on that vision and in supporting the work of the Abu Dhabi Tawteen Council."

Etihad introduced two programmes this year to attract UAE nationals to join its global workforce as part of the graduate development programme for sales and airport operations.

Emiratisation programmes currently have more than 570 trainees deployed across various streams within the airline.